The government of Ontario is currently looking at ways to address precarious work through a sweeping review of labour legislation and enforcement in the province – other provinces are planning to follow suit. Employment risks are also featured in federal Finance Minister Bill Morneau's statements about "job churn" and the persistence of short-term employment. But how bad is the problem and what should be done about it?
In a recent C.D. Howe Institute publication, we looked at the common meanings of precarious work and assess the policy levers available to address it. We consider three types of precarious employment that we refer to as "non-standard" jobs – part-time, temporary and unincorporated self-employment.
We find that non-standard work as a share of total employment surged in the early 1990s, from 28 per cent to 34 per cent, but has been relatively stable since. Within the categories of non-standard work, however, temporary work has seen the most growth since 1997, particularly in services sectors such as health and education. Part-time employment has grown in line with total employment and seen an increase of 30 per cent between 1997 and 2015. Unincorporated self-employment has remained relatively stable since the late 90s.
There are multiple reasons why non-standard employment persists in making up around one-third of Canadian jobs – they include globalization, technological change and shrinking union density. But another reason is shifting worker preferences – the majority of non-standard workers, after all, do it voluntarily.
In many cases, temporary positions are stepping stones to more permanent positions. But not all workers are fortunate enough. OECD data suggest that a little more than a quarter of Canadian part-time workers in 2014 would have preferred full-time employment. Likewise, for temporary workers, another OECD study found that, in 2013, a quarter of them in Canada would have preferred permanent positions. Even though the nationwide picture isn't as bleak as it is made out to be, we urge policy makers to focus on the segment of the labour force involuntarily engaged in temporary and part-time employment.
Policy makers can approach this problem in two ways: 1) with more rigid labour laws that try to shape employment arrangements; or 2) with policies that strengthen the safety net under workers with precarious jobs. Other countries have a head-start on Canada on this score and their experiences hold important lessons.
Netherlands, for example, found shortening the maximum term of a temporary job under labour regulations had the unintended consequence of higher rates of job dismissals and more temporary workers. The Danish experience focused more on improving access to social programs and less on legislative restrictions for employers. This was largely successful in reducing unemployment while facilitating a rewarding work environment.
Governments looking to reduce the incidence of non-standard work should be wary of heavy-handed legislative interventions and focus instead on bolstering social policy frameworks. Federal and provincial governments, acting in concert or independently, should reduce the uncertainties of a volatile labour market for newcomers and incumbents.
They could start by:
1) Ensuring appropriate access to Employment Insurance benefits for the most vulnerable workers, including part-time and temporary non-seasonal workers, many of whom don't qualify because of hours-worked eligibility criteria. Instead, weeks-worked entrance requirements and claimant categories that recognize non-standard workers should be strongly considered;
2) Ensuring obstacles to EI access are not hindering access to other critical social programs under the EI umbrella, such as special benefit programs such as maternity/paternity leave and courses for skills upgrading;
3) Doing a better job filling the gaps in health coverage experienced by workers in precarious jobs for services such as prescription drugs, mental health, vision and dental care. Provinces, such as Ontario, should take direct responsibility for this and improve coverage rather than wait for unlikely federal interventions;
4) Protecting the value of expanded CPP benefits for low-income workers by exempting them from punitive, income-tested guaranteed income supplement clawbacks.
Understandably, provinces want to look at labour legislation and improved enforcement for solutions. But there are ways the government can ease the burden for workers in precarious jobs, without too much tampering with the way new jobs are created.